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« This Week in Wall Street History
This Week In Wall Street History Mar 31-Apr 6
Acknowledging several foreign policy failures, President James Madison imposed a ninety-day embargo on British goods- an early example of official economic sanctions- this week on April 4th 1812. Congress enacted the first Embargo Act in December 1807 as a diplomatic effort by then President Thomas Jefferson and Secretary of State James Madison to restrict trading with European nations during the Napoleonic Wars. Theoretically, it was hoped that the warring countries Britain and France would ‘recognize’ American neutrality and leave its ships alone and unrestricted. However, the policy failed…most notably with the British “impressment” or forced service of over 10,000 seized American sailors. Additionally, enterprising Americans fueled a lively black market for embargoed goods in the Federalists party stronghold of New England- where loyalty for the ‘Mother Country’ ran counter to neutrality. Smuggling also thrived in the South- to counter the economic hardships resulting from the market restrictions placed on its own goods. In 1809, Congress replaced the Embargo Act with the Non-Intercourse Act that resumed world trade with all European nations except France and England. One year later, the Act was replaced by the complex Macon’s Bill No. 2…yet another legislative effort to lift trade restrictions but with certain provisions. Sadly, though not surprisingly, use of economic sanctions to avoid actual combat failed. America officially went to war against Great Britain in June of 1812, and upon its victory, heralded the demise of the pro-British Federalist Party. news@doubledownmedia.com 3/31/08
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